Oct 18, 2016
Operator
Good day, everyone and thank you all for joining us to discuss Equity LifeStyle Properties’ Third Quarter 2016 Results. Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey, our Executive Vice President and CFO; and Patrick Waite, our Executive Vice President and COO.
In advance of today’s call, management released earnings. Today’s call will consist of opening remarks and a question-and-answer session with management relating to the company’s earnings release.
As a reminder, this call is being recorded. Certain matters discussed during this conference call may contain forward-looking statements in the meanings of the federal securities laws.
Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events.
At this time, I would like to turn the call over to Marguerite Nader, our President and CEO.
Marguerite Nader
Good morning and thank you for joining us today. Today, we will be focused on a detailed review of the third quarter, our initial 2017 guidance and our rationale for the recommended 2017 dividend increase.
Our third quarter results show the strength in our real estate footprint and the benefits that our portfolio has from the positive demographic trend from the baby boomers. In the third quarter, we had our 28th successive quarter of occupancy growth and our occupancy at our MH property is 94%.
The occupancy growth in the quarter was 180 sites. The quarter continued to show the positive trends that we have been seeing throughout the recent past, including an ability to grow both the absolute number of occupied sites as well as improve the quality of our occupancy through increased homeowners and a reduction of renters.
We are pleased with the trend in our new home sales. In the quarter, we sold 207 homes, a 60% increase from 2015.
Our average new home sale price for the quarter was $61,000 and over 60% of our new home sales were in Florida and Colorado. Our sales platform incorporates the use of open houses, referral programs and targeted internet marketing.
Our customers are focused on the activities available at our properties and they have a strong desire to be part of the ELS community. From a marketing perspective, we have now completed our summer marketing campaign.
As we did last year, we focused on the 100 days of camping between Memorial Day and Labor Day and ran a social media promotion, which had a social media reach of 3.7 million over the summer as we encourage customers to post pictures of themselves enjoying our properties. This campaign leveraged our over 315,000 fans and followers across multiple social media platforms.
Based on the previous success of this campaign, we expanded 100 days of camping to include a multimedia marketing campaign across channels, including web banners, digital ads, e-mail, promotional video and property marketing. The transient component, which is the most difficult to predict, has performed well for us this year.
Our transient business is concentrated in the summer months with over 50% of the full year revenue coming in from Memorial Day through Labor Day. These three key holiday weekends performed 13% better than last year.
Turning to 2017, each year, we finish our budget process in October and provide detailed projections for the following year. We have issued guidance of $3.50 for next year, which is a 6.6% growth in FFO per share.
Certain line items like seasonal and transient activity require more visibility to be able to forecast with more accuracy. As is our practice, we will update guidance each quarter as we have more knowledge about reservations at the property level.
Demand for our product is strong. The demographic trend is in our favor.
We anticipate that we will continue to see the same positive trends from 2016 coming into 2015, including strengthen our RV footprint and increase MH ownership transactions. I would like to update you on our proposed 2017 dividend policy.
The ultimate decision for the dividend policy is a board level decision that is typically done at our November Board of Directors’ meeting. We feel it is helpful to highlight management’s recommendations and rationale with respect to the dividend.
Each year, to arrive at a recommendation, we review our projected growth in FFO and our outstanding obligations, with the goal of ensuring our underlying financial flexibility. In addition, we stress test our future obligations, including factory in an increased interest rate environment to ensure that we can continue to meet our obligations.
The stress test reveals the strength of our balance sheet, which has been fortified over the years with longer term maturities. Currently, our average term to maturity is 10 years, which is almost double the REIT sector average.
This compares to 5 years ago when our average term to maturity was 5 years. The stability and growth of our cash flow, our solid balance sheet and the strong underlying trends in our business have led our management to recommend a $0.25 increase in our dividend to $1.95 for 2017.
We have increased our dividend significantly over the last few years. To give a little history, over the past 5 years, we have increased our dividend 95%.
Going back in history even further shows that this is our 13th consecutive year of dividend growth. Please note while this is management’s recommendation, the Board has not yet met to discuss it.
Now, I would like to comment on the recent hurricane that impacted the East Coast. We are thankful that our residents, guests and employees did not suffer any fatalities or injuries.
Our response time in the field to the storm was impressive. We prepared in advance and had crews ready to begin the cleanup efforts shortly after the storm passed.
I would like to express my gratitude to the teams who have worked tirelessly to make sure that the ELS properties impacted by the storm were back in operation as quickly as possible. The relatively minor damage caused by the storm is a testament to the stability of the homes in our communities.
Over the years, there have been improved building standards for manufactured homes which significantly mitigated the damage as our communities. I will now turn it over to Paul to walk through the numbers in detail.
Paul Seavey
Thanks, Marguerite and good morning everyone. I will review our third quarter results, walk through our detailed guidance assumptions for the remainder of 2016 and discuss our preliminary guidance for 2017.
We reported $0.83 normalized FFO per share for the third quarter, a $0.01 ahead of our guidance. Overall, a slight miss in core property operations was offset by lower than expected property management and G&A expenses.
During the quarter, we recognized approximately $800,000 of income from settlement of a note receivable that was issued when we sold our Michigan portfolio in 2013. Core base rental income was up 4.7% compared to last year, slightly higher than forecast with 3.8% coming from rates and 90 basis points coming from occupancy.
Our year-to-date occupancy gain of 450 sites is the result of increasing our homeowner count by 628 and reducing rental occupancy by 178. Year-to-date, we have sold 508 new homes, including 162 through our ECHO joint venture.
Our core RV revenues were higher than guidance as a result of better than expected annual and transient revenues. 5.8% growth in annual is the result of rate increases in our Encore portfolio and occupancy growth in the Thousand Trails property.
Our transient revenues increased 11.3% for the quarter compared to last year. Growth drivers include increased rate in our summer season properties and occupancy gains in California and the West.
Membership dues revenue was higher than guidance in the quarter. During the quarter, we sold 4,100 Thousand Trails camping pass memberships.
Year-to-date, we have sold approximately 10,800 camping passes. Upgrade sales volume in the quarter was 740 units at an average price of approximately $5,000.
The net contribution from membership sales and expenses was higher than guidance mainly as a result of lower commission expense. Utility and other income is higher than guidance mainly from increased utility recovery related to higher electric and water usage during the quarter.
In the quarter, core property operating expenses were higher than forecast. This is primarily the result of the increased utility, repair and maintenance and administrative expenses.
Our utility expense, net of recovery, was in line with forecast for the quarter. The variance in repair and maintenance expenses was caused in part by events that we don’t include in guidance.
These include expenses related to insured losses such as the fire at one of our locations and modest cleanup expenses following Hurricane Hermine in early September. In addition, we incurred higher than expected R&M expenses at certain locations related to the temporary interruption of water and sewer service.
Legal fees and advertising expenses were the main drivers of the variance in administrative expenses. Overall, core NOI before property management grew 5.3% in the quarter.
Year-to-date, core NOI increased 5.8%. Core revenues were up 4.5% and core expenses have increased 2.7%.
NOI from acquisition properties was $1.7 million in the quarter. Year-to-date, the acquisition properties have performed as expected and have contributed $3.2 million of NOI.
Property management and corporate G&A expenses of $19.2 million were approximately $0.5 million lower than guidance because of lower than expected travel expenses from payroll savings related to some open position. Other income and expenses were higher than guidance as a result of the note receivable settlement I mentioned earlier.
Financing costs of $27.7 million were in line with guidance. Year-to-date, normalized FFO was $2.50 per share with growth rate of 8.7% over 2015.
The press release and supplemental package provides fourth quarter and full year 2016 guidance in detail as well as preliminary 2017 guidance. As I discussed guidance, keep in mind, my remarks are intended to provide our current estimate of future results.
All growth rates and revenue and expense projections represent midpoints in our guidance range. Our fourth quarter normalized FFO guidance is approximately $72.8 million or $0.78 per share at the midpoint of our guidance range.
We expect core NOI growth of 4.6% in the fourth quarter to contribute to 5.5% core NOI growth for the full year. We assume no core MH occupancy gain during the quarter.
Looking ahead to the fourth quarter in our RV business, our current annual, seasonal and transient reservation pace is in line with our expectations. Our fourth quarter core property operating expense growth assumptions don’t anticipate a material impact as we finalized our assessment of damage caused by Hurricane Matthew.
Our current expectation of total restoration cost is in line with our initial assessment. For the full year, we expect core revenue growth of 4.3%, core expense growth of 2.8% and core NOI growth of 5.5%.
Normalized FFO at the midpoint of our guidance range is about $304 million or $3.29 per share, a growth rate of 8.2%. The midpoint of our preliminary guidance range for full year 2017 normalized FFO is approximately $325.8 million or $3.50 per share.
This represents a 6.6% increase over 2016 normalized FFO per share. Growth in core NOI before property management is expected to be approximately 4.4%.
Our projections of core NOI and normalized FFO growth for 2017 assume fourth quarter 2016 results will be consistent with our stated guidance. Consistent with our past practice, we plan to update guidance on our January call and we may adjust growth rates on certain line items after we finalized results for 2016.
We assume no growth from incremental occupancy we may gain in our core MH properties during 2017. Base rent is expected to grow 4%, with 3.5% coming from rate and 50 basis points from occupancy as a result of sites we filled in 2016.
In our core RV resort business, we expect 4.4% growth in 2017. Our annual revenues represent almost two-thirds of our total RV revenues and we expect 5% growth mainly as a result of increases in rates across our portfolio.
We project 2% growth at seasonal revenues and 4.5% transient revenue growth. Our first quarter generates a bit more than 50% of our seasonal revenue for the year and 20% of our transient revenue.
Though the winter season is still weeks away, we incorporated our seasonal and transient reservation pace for the first quarter 2017 into our guidance assumption. In total, our right-to-use annual payments revenue, right-to-use contract sales and sales and marketing expenses are expected to contribute approximately $46.3 million in 2017 compared to $45.6 million in 2016.
We assume sales and activations of 29,800 Thousand Trails camping passes next year. In 2017, we expect to sell approximately 13,100 camping passes and we expect the RV dealer program to generate 16,700 additional memberships.
Core property operating maintenance and real estate tax expenses are assumed to increase 1.8% in 2017. As we built our budget for repairs and maintenance expenses, we assume normal run-rate operations.
Historically, we have not assumed expenses related to property damage or other one-time items in our guidance. Adjusted for our experience in 2016, the 2017 core property maintenance and real estate tax expense growth rate will be approximately 2.5%.
Our guidance for financing costs does not include assumptions related to the secured debt that matures or is eligible for prepayment without penalty after January 2017. Our guidance for acquisition properties includes the expected contribution from the Riverside RV property we recently closed.
We assume no other acquisition activity in our 2017 guidance model. I will now provide some comments on our balance sheet.
Our debt maturity schedule includes approximately $57 million maturing in 2017. In the next few weeks, we expect to complete our previously announced 2016 refinancing activity.
This is expected to include the early payoff without penalty of approximately $23 million in 2017 maturity. Current secured debt terms are 10 years at coupons 3.5% to 4% range, 60% to 75% loan to value and 1.35x to 1.5x debt service coverage.
The GSEs and life companies continue to quote MH RV deals at rates well inside CMBS. We continued to see interest in long-term financing options from life insurance companies.
High quality age qualified MH assets continue to demand best financing terms. And we continue to place high importance on balance sheet flexibility.
Our interest coverage is 4.1x and our line of credit has $400 million of availability. Now we would like to open it up for questions.
Operator
[Operator Instructions] Our first question comes from Juan Sanabria of Bank of America. Your line is open.
Juan Sanabria
Hi, good morning. I was just hoping you could speak a little bit about your revenue, same-store core revenue guidance assumption for ‘17, it’s down a little bit year-over-year and I think it’s because maybe if I understood correctly, you are not assuming any occupancy upside, but how should we think about occupancy from here and then come to levers to go higher or lower or the sensitivities around same-store revenue, because I think you started last year to run the similar number and outperforming?
Paul Seavey
Alright. So our guidance is in the MH 3.5% coming from rates and 50 basis points coming from occupancy.
And again, that is the occupancy that we expect from sites that we are filling in 2016. Our long historical practice is not to make assumptions related to the use of free cash flow, which includes the purchase of homes to gain occupancy throughout the portfolio.
So as you look at our experience in 2016, as I mentioned, we have gained 450 sites year-to-date. You could potentially kind of look at that and consider the environment and the occupancy gains over time, although we haven’t dialed that type of growth into our assumptions.
Juan Sanabria
And where do you see as peak occupancy at this point?
Patrick Waite
Yes. This is Patrick.
I will answer that question. As Marguerite mentioned in our opening comments, we are at 94% occupancy on the MH platform.
Our historical high watermark is 95%. And just to put into context, Paul framing our occupancy growth recently, over the trailing seven quarters, we have added 900 occupied sites.
That’s about 130 basis points. And that’s comprised of an increase of 1,400 owners and a decrease of 500 renters.
So that’s a relatively reasonable assumption that we will continue down that path of increasing occupancy in that 80 basis points, 90 basis points annually. All of that of course assumes that the market continues to hold and there is demand to buy homes.
Juan Sanabria
And then just lastly, I was hoping if you can comment on what you are seeing for acquisition opportunities, whether single asset or maybe some portfolios I know you guys have been, I think a little bit more conservative than some of your peers and just how you are thinking about the opportunities of that?
Marguerite Nader
Sure. So in the quarter, we closed the one property, an RV property located outside of Tampa.
That was the deal, just to give you the specifics of that deal, that was a deal that our acquisition teams have been working on for 2 years or 3 years, just working with the seller. So that’s not unlike what we see throughout our portfolio of opportunities where we are just working with interested sellers and what is the right timing.
As to the broader market, there is a strong demand for our product type and that we are working with interested sellers, but not quite sure when the timing would be.
Juan Sanabria
Thank you very much.
Marguerite Nader
Thank you.
Operator
Thank you. Our next question comes from Gwen Clark with Evercore ISI.
Your line is open.
Gwen Clark
Hi, good morning.
Marguerite Nader
Good morning Glenn.
Gwen Clark
On the acquisition front, I saw you guys acquired a vacant land slot near Colony Cove, can you talk about your plans for that space and how many sites do you think that could hold?
Marguerite Nader
Sure. So just a little bit of the background, we bought Colony Cove and Ridgewood in 2011.
These properties are located adjacent to each other and they are located on the Manatee River in Ellenton, Florida. Combined, they have about 2,500 sites.
When we bought the properties, they were at 89% occupancy. Today, that occupancy at those properties is 97% as a result of selling new homes over the last few years.
So the property is in high demand just from a property perspective and the location. And we have been negotiating with the buyer who owns this 25 acres of land – piece of land in between these assets and the land was already zoned MH.
So it was easy for us to make that decision to buy the land and then incorporate it into the property. We anticipate that we probably get 120 sites after you take out the wetland in that area and we would anticipate starting network in ‘17.
Gwen Clark
And what would the lease up of those sites be like from a timing perspective?
Marguerite Nader
You don’t – I think we can give you a little bit more clarity on that as we develop them. But just to give you the sense, I would kind of give you the broad sense of occupancy increase in that area pretty significantly over the last few years.
So there is high demand.
Gwen Clark
Okay, great. And then one other quick question, can you just talk about the performance of all age this quarter versus the age restricted asset?
Marguerite Nader
Sure. The all age portfolio performed similarly to the age qualified portfolio.
What we see sometimes in the all age is some amount of volatility if there is a shakeup in the local economy. But we haven’t seen them performed in line with age qualified.
Gwen Clark
Okay, that’s great. Thank you very much.
Marguerite Nader
Thank you, Glenn.
Operator
Thank you. Our next question comes from Nicholas Joseph with Citi.
Your line is open.
Nicholas Joseph
Thanks. Marguerite, you just mentioned strong demand for MH and the product type, is there an opportunity or expectation in 2017 to dispose of any communities that maybe don’t fit with your long-term plans?
Marguerite Nader
Yes. I would say that we have maybe a handful or less than a handful of the properties that we wouldn’t mind not owning just because they are a little bit more remote or out.
Those are onesie twosie assets that we bought in a portfolio transaction and so there might be some opportunity there, but nothing of any great scale.
Nicholas Joseph
Thanks. And then in terms of the 2017 rate growth assumes, so putting the occupancy gains that have already occurred aside, what percentage of the properties are dictated by prospectuses and which or what percent I guess are market rate?
Paul Seavey
We have – when you look at – I will broaden it slightly to say that the prospectuses in Florida, they can be market or they can be fixed increase or tied to CPI. So the way that we look at it, think about it is to say that a third of them are tied to CPI in some fashion.
And this is the leases across the portfolio. Half of those have floors in place.
The floors are right around 3%. I will say that California rent control tends to be based on Western or California CPI.
So there is an up-tick there relative to national CPI over the past couple of years. And then the remaining two-thirds are market based.
Nicholas Joseph
Thanks.
Operator
Thank you. Our next question comes from Gaurav Mehta with Cantor Fitzgerald.
Your line is open.
Gaurav Mehta
Yes. Hi, good morning.
A couple of questions, first on the result based income side, your seasonal revenues came in lower than your guidance, I was wondering if you could comment on what you saw there?
Marguerite Nader
Sure. Our seasonal revenue represents about I think 15% of our overall RV revenue, so it’s the smallest piece.
And the seasonal revenues really concentrated in the first quarter of the year with 50% coming in, in that time from Florida and Arizona. So as we look and we built up our 2017 budget and we looked at our experience in 2016 and reviewed our reservation trend, we would determine where we thought we would end up and then that’s what we kind of came up within guidance.
In the seasonal bucket, we are really focused on the return of our Canadian customer and a few other key markets in Florida and Arizona to drive additional reservation. The weather will play a role in this as it gets cold up in north, which we anticipate doing soon and then the migration to the south will follow.
Gaurav Mehta
Okay. And then on the rental home income side, you lowered your 2016 growth expectation I was hoping if you could provide some more color on what you are seeing?
Paul Seavey
Yes. In the quarter, the net rental activity was about $200,000 unfavorable to our guidance.
That’s really driven by lower occupancy, as Patrick talked about, the conversion of renters to owners. There was a little bit of a timing difference on some expenses.
The full year guidance for 2016 shows the net contribution as down slightly and that’s really just the occupancy level in the rental program.
Gaurav Mehta
Alright, great. Thank you.
Paul Seavey
Thanks.
Marguerite Nader
Thanks, Gaurav.
Operator
Thank you. Our next question comes from Paul Adornato with BMO Capital Markets.
Your line is open.
Paul Adornato
Yes, hi. Marguerite, I think you said that new homes are at the $61,000 price point, I was wondering how that compares historically?
I remember kind of going into the recession, you were kind of emphasizing more upscale homes and then during the recession, went a little bit more downscale, so where are we today in the new home sales?
Marguerite Nader
Sure. So, in 2008, 2007, I guess I would say, we had homes that we are selling on average of about $75,000, $80,000 and in some cases going all the way up to $200,000.
Then we had a period of time where we didn’t sell any homes, I think we sold 2 or 3 homes a year for several years. And when we kind of came back online and started to see a pickup in new home sales, we really looked at what was the customer looking for and try to have an understanding of that and it’s really the age qualified side looking for a two-bedroom, two-bath model.
And the pricing on that ended up being in that $60,000 to maybe $70,000 range and that seems to be the sweet spot for our customers for what they are looking for. In most cases, they still have their home up north, so they are really covering – handling 2 homes.
So, it’s a good price point for us and we think that would continue into ‘17.
Paul Adornato
Okay, great. And on the resort side, the transient – the outlet for the transient business, you are not making any occupancy gain assumptions, I believe in 2017 guidance.
Is that to be conservative or do you feel like you are close to maxing out on the resort occupancy?
Marguerite Nader
I think Paul as you go through – as we go through the year through guidance, you see us increase our – we increase our visibility into the transient business and then we adjust our guidance. But right now, I know our operations team feel like we just finished summer and to talk about next summer with that amount of specificity is difficult.
So that’s really what it is. It’s really not having that visibility into how the holiday weekends are going to turn out next year, not really a comment on anything other than we are not quite there yet.
We got to get past Christmas.
Paul Adornato
And there was a big emphasis on converting that transient to seasonal, seasonal to annual, is there more juice left in that effort?
Marguerite Nader
Yes. I think there always is, from a standpoint of bringing a new customer in, which is what we are doing a lot of.
Our social media campaign, bringing new customer in, they are kind of – they are coming on a trial basis. They want to understand what we have to offer and then when we recognized and kind of flagged them as a new customer it’s then that we try to start the conversion process of working them through seasonal and annual.
Paul Adornato
Okay, thank you.
Marguerite Nader
Thanks, Paul.
Operator
Thank you. Our next question comes from Drew Babin with Robert W.
Baird. Your line is open.
Drew Babin
Good morning. Most of my questions have been answered, but I just had one on the dividend increase.
Was that conversation more along the lines of, hey, our AFFO payout ratio is very low compared to most REITs given where a balance sheet is in our liquidity, we can let it pickup a little bit or was it – how much does taxable income accounting possibly factor into that where the payout ratio kind of needs to go up and more of your income over time needs to be paid out? Was that part of the conversation as well?
Paul Seavey
Yes. Just in terms of the conversation, as we talked about it in the past on an annual basis, we developed this recommendation after preparing our budget considering what our obligations are, thinking about principal amortization that we need to pay, recurring capital expenditures and then just the opportunities as it relates to investment either in acquisitions or inside the portfolio with expansion opportunities and so forth.
We don’t target a payout ratio when developing the recommendation. It’s really more about meeting those obligations and then having free cash flow to be able to execute on those opportunities.
And finally on the taxable income front, we do, as a result of some tax planning back in ‘05 and ‘06 we do have net operating losses that give us flexibility with respect to the dividend. So, as we sit here today we don’t have pressure coming from that.
Drew Babin
Okay, that’s helpful. Thank you.
Marguerite Nader
Thanks Drew.
Operator
Thank you. Our next question comes from Todd Stender with Wells Fargo.
Your line is open.
Todd Stender
Hi, thanks and thanks for the details on the vacant land you acquired. But just to get a sense of maybe a cost per site or a total budget, can you guys disclose maybe what your cost per site assumptions are?
And then since we see most of the acquisitions this year on the RV side, maybe just to get a good sense of what you buy out right now for MH price per site?
Marguerite Nader
Sure. So on that land, we would anticipate just the cost to develop the sites and these would be MH sites, would be about $35,000 per site to develop that land.
And we would get, I think, the starting site rent or the rent in that area right now is about $8,000 a year. And so it’s a matter of getting those sites built and then we see it as just not so much as a development, but an expansion of those existing properties.
With respect to pricing in the marketplace right now, it’s difficult to say, I mean, we can certainly talk about what you have seen what we have done this year, there haven’t been a whole lot of other data points and transactions that are out there, still having conversations with sellers, including conversations, including OP units and that type of thing, but it’s difficult to quote a per site, it really runs the gamut across the country.
Todd Stender
But higher than RV, right, I mean if you look at your RV price per site, it looks like a range of about $24,000 up to maybe $43,000?
Marguerite Nader
Yes. I mean, it’s really – that’s really just a function of the revenue.
And it depends even within the RV, it runs the gamut of whether or not you have got a highly transient RV park versus a highly annualized RV park and that would set the pricing parameters.
Todd Stender
Okay. Thanks, Marguerite.
And just for benefit as we talked to investors about the RV side, we are seeing more transactions. Can you just talk about if you guys look at it on a cap rate basis, are you an IRR buyer?
Can you talk about maybe your return expectations in RV and maybe if that’s trending higher or lower into next year?
Marguerite Nader
Yes. I mean, it’s similar to what we do on the MH side, which is we will look at what’s the initial yield and what’s the growth and we look at a yield plus growth kind of calculation.
We don’t deal with reversionary cap rates, because it doesn’t – so, the IRR model doesn’t necessarily work for us, because we are not sellers. So, we look at them in doing that and coming up with those kind of going in yields, we try to determine what are we adding, what kind of value are we adding, is ELS coming to the property, adding to the equation such that we think we can either raise rents or we can reduce expenses.
In a lot of instances, there is a heavy payroll load at some of the properties that we are looking at and we have opportunities to downsize those. So, it’s similar on the MH and the RV side.
And it’s really – if MH and RV are located in similar locations, you are going to see cap rates traded about the same, the price per site will change just because of that revenue component.
Todd Stender
Can you talk about the cap rate for the Riverside, maybe what the occupancy is? And then any CapEx that you will need to put into it?
Marguerite Nader
Sure. The Riverside cap rate was 5 cap and that was – it’s an RV park.
So, in terms of occupancy, it’s highly annualized RV park and in terms of capital, not a lot of capital. The owner did a very good job of keeping up this property.
He built the property from scratch, expanded the property and he is actually going to continue to consult with us on the property, because he has done a very good job of operating it over the years.
Todd Stender
Thanks. And then finally you have been tapping insurance company debt lately, can you just speak about their competitive nature right now compared to maybe what agency debt is loan to values and just get the general sense of the appetite for all secured lenders right now?
Paul Seavey
Sure. Overall, life companies actually, at this moment in time, life companies have essentially exhausted their capacity in 2016.
So they are waiting for the New Year when they reset their allocations. But the quotes that we were seeing in the third quarter were, call it 75 basis points or maybe even a little bit more inside of CMBS lenders for 10-year financing.
Those life companies do continue to have interest in long-term debt that we have tapped over the last couple of years. The LTV from the life company is lower than you see from CMBS, call it 60% or 65% max from the life companies versus CMBS potentially going up to 75%.
Todd Stender
Great. Thank you, Paul.
Paul Seavey
You’re welcome.
Operator
Thank you. [Operator Instructions] Our next question comes from Ryan Burke with Green Street Advisors.
Your line is open.
Ryan Burke
Thank you. This question kind of goes hand-in-hand with Paul’s last question, Paul I do believe the range and just overall lending rates that you quoted this quarter was about 25 basis points above what it was last quarter, is there anything that you would be on what you just described in the last answer which is causing that?
Paul Seavey
No. The up-tick in treasuries that we saw in the last quarter, there were kind of floors that were embedded in rate prior to that.
So some amount of movement on a forward basis, I would anticipate that rates will start to move more in lockstep with treasuries, but not much more than what I have described already.
Ryan Burke
Okay. And then on the September refi and the October new loan that closed, what was the approximate LTV on those?
Paul Seavey
That was life company debt, so it’s right in the 60% range.
Ryan Burke
Okay. And then one operating question, looking at your number of used rental homes, that decreased nicely for the quarter, something like 15% which is the nice positive sign, but the new rental homes increased by about 10%, what exactly is that play there?
Patrick Waite
Well as you noted, you compare to the same time last year, that’s an increase of your percentages translate to about 240 ups in new rentals and a decrease of about 400 used rentals. There is a couple of driving factors.
One is a focus on selling off used inventory over time would just make sense with respect to running the rental business. On the new home side, it’s exposing more customers to our platform in the lifestyle and focusing on converting those customers.
Ryan Burke
Okay. And are those new homes primarily coming out of the ECHO JV?
Patrick Waite
There is a mix, but I don’t have that in front of mind, but I would say its representative of the overall transaction mix.
Ryan Burke
Got it, okay. Thank you.
Marguerite Nader
Thanks Ryan.
Operator
Thank you. Since we have no more questions on the line, at this time I would like to turn it back to Marguerite Nader for closing comments.
Marguerite Nader
Thank you all. And Paul Seavey will be around for any further questions.
Operator
Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program and you may all disconnect.
Everyone, have a great day.